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1 Great Lakes LNG- Vessel Fuel Terminal – Hiroko Tada CMA 2013 Conversion of Great Lakes Bulk Vessels to LNG: Evaluation of a Potential Fuel Terminal Hiroko Tada Transportation and Logistics Management Major University of Wisconsin-Superior Prepared for the Connecticut Maritime Association January 2013 I would like to express the utmost gratitude to Lead Operator, Mr. Rodney Graham from Calumet Superior, LLC., Duluth Marine Terminal, Great Lakes Maritime Research Institute for the help and support of this report. I am also grateful to my teacher, Dr. Richard Stewart, who assisted me in completing it. Most marine fuels are residual fuels, which is the low-grade oil product that remains after the distillation of crude oil. After the petroleum crisis in 1973, the quality of residual oil declined. Companies had improved their refining technologies to exact the maximum quantity of refined products (Buckley 189). As a result, the consistency of contaminants such as sulfur, the substance that causes negative health effects and environmental threats, has increased. To improve on air quality and protect public health from the toxic emission, the United States and Canada submitted a joint proposal to the International Maritime Organization to designate an Emission Control Area (ECA), a certain area of United States and Canadian coastal waters including the Great Lakes. (EPA 1-1). The ships sailing within the ECAs have to reduce their emission of sulfur oxide (SO), nitrogen oxide (NOx), and fine particulate matter (PM2.5) (EPA 1). To meet the ECA standard, the ships either have to (1) install scrubbers, (2) use low sulfur content fuel, (3) a combination of (1) and (2), or (4) use a clean fuel, such as natural gas. Our research team is composed of Hiroko Tada, the principle investigator, Julia Haeder, who contributed to the writing survey letter, and Dr. Stewart as an advisor. The Great Lakes Maritime Research Institute (GLMRI) has been funded by the U.S. Maritime Administration to explore the potential of shifting suitable Great Lake ships to using natural gas as a fuel in preparation for the vessels need to meet the requirements of the North American Emission Control Area (ECA). Initial GLMRI research indicates that Liquified Natural Gas would most likely be the type of natural gas fuel used by Great Lakes vessels. In order to use LNG as a vessels’ fuel, it is essential to develop a supply chain for LNG in the Great Lakes region. Without a stable availability of LNG, it is difficult for shipowners to convert to LNG. GLMRI has cataloged the current fueling locations used by Great Lakes vessels and, as part of the research process, is evaluating the potential to modify the existing fuel terminals to provide LNG.

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Page 1: Conversion of Great Lakes Bulk Vessels to LNG: Evaluation ... 2. Calumet Marine Termina… · 2 Great Lakes LNG - Vessel Fuel Terminal – Hiroko Tada CMA 2013 Duluth, Minnesota and

1 Great Lakes LNG- Vessel Fuel Terminal – Hiroko Tada CMA 2013

Conversion of Great Lakes Bulk Vessels to LNG:

Evaluation of a Potential Fuel Terminal Hiroko Tada

Transportation and Logistics Management Major University of Wisconsin-Superior

Prepared for the Connecticut Maritime Association

January 2013

I would like to express the utmost gratitude to Lead Operator, Mr. Rodney Graham from Calumet

Superior, LLC., Duluth Marine Terminal, Great Lakes Maritime Research Institute for the help and

support of this report. I am also grateful to my teacher, Dr. Richard Stewart, who assisted me in

completing it.

Most marine fuels are residual fuels, which is the low-grade oil product that remains after the

distillation of crude oil. After the petroleum crisis in 1973, the quality of residual oil declined. Companies

had improved their refining technologies to exact the maximum quantity of refined products (Buckley

189). As a result, the consistency of contaminants such as sulfur, the substance that causes negative health

effects and environmental threats, has increased. To improve on air quality and protect public health from

the toxic emission, the United States and Canada submitted a joint proposal to the International Maritime

Organization to designate an Emission Control Area (ECA), a certain area of United States and Canadian

coastal waters including the Great Lakes. (EPA 1-1). The ships sailing within the ECAs have to reduce

their emission of sulfur oxide (SO), nitrogen oxide (NOx), and fine particulate matter (PM2.5) (EPA 1).

To meet the ECA standard, the ships either have to (1) install scrubbers, (2) use low sulfur content fuel,

(3) a combination of (1) and (2), or (4) use a clean fuel, such as natural gas.

Our research team is composed of Hiroko Tada, the principle investigator, Julia Haeder, who

contributed to the writing survey letter, and Dr. Stewart as an advisor. The Great Lakes Maritime

Research Institute (GLMRI) has been funded by the U.S. Maritime Administration to explore the

potential of shifting suitable Great Lake ships to using natural gas as a fuel in preparation for the vessels

need to meet the requirements of the North American Emission Control Area (ECA). Initial GLMRI

research indicates that Liquified Natural Gas would most likely be the type of natural gas fuel used by

Great Lakes vessels. In order to use LNG as a vessels’ fuel, it is essential to develop a supply chain for

LNG in the Great Lakes region. Without a stable availability of LNG, it is difficult for shipowners to

convert to LNG. GLMRI has cataloged the current fueling locations used by Great Lakes vessels and, as

part of the research process, is evaluating the potential to modify the existing fuel terminals to provide

LNG.

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2 Great Lakes LNG- Vessel Fuel Terminal – Hiroko Tada CMA 2013

Duluth, Minnesota and Superior, Wisconsin (the Twin Ports) is the largest port on the Great

Lakes and in the top twenty of the United States. Over 1,200 vessels a year call at the port, and it has

been a fuel stop for over one hundred years. Initial GLMRI research has indicated that there are sufficient

natural gas supply lines coming to the region to supply a gas liquefaction plant. Within 250 miles of the

port there are multiple markets for LNG including trucking, rail, mining, transit, and agriculture as well as

shipping. It is important for suppliers know there is enough demand to justify building a natural gas

liquefaction plant.

Our research team was tasked with identifying the current fuel consumption for ships fueling in

the Twin Ports and to examine the existing fueling terminal. The data gathered will assist in determining

fueling options and what size liquefaction plants would be appropriate for this region. This paper is the

report on the research conducted to determine marine fuel consumption and the potential to use the

current terminal for LNG.

Survey Methodology

Research from Greenwood’s Guide to Great Lakes Shipping 2009 and Duluth Seaway Port

Authority: Ms. Adele Yorde indicated that the two companies, Liquid Transport Inc. and Calumet

Superior, LLC., Duluth Marine Terminal (Calumet), are the major fuel suppliers in the Duluth / Superior

area, (Greenwood’s. 19.5). To obtain fuel consumption data, a survey was sent to each company.

In order to send a survey form and letter, we investigated quantitative research methodology to

learn how to compose a concise survey form. It is critical to prepare detailed questions in order to gain

information without confusion from respondents. Our survey draft was reviewed by Dr. Stewart. After

discussion with him, and research into the types of fuel used by ship, it was revised to be more precise.

At first we decided to send the surveys by email. As our survey form was made using Excel, we

thought it was not convenient for respondents to fill out a survey form by hand. However, Dr. Stewart

gave us advice that sending our letters by snail mail will catch the respondent’s attention better than

email. We installed our Excel survey form (see Appendix I Survey Instrument) into a Great Lake

Maritime Research Institute flash drive and sent it with a cover letter by snail mail. On December 5, 2012,

we sent survey letters (See Appendix I) to Liquid Transport, Inc., 101 Hwy. 61E. Esko, MN 55377, and

Calumet, 1400 Port Terminal Dr. P.O. Box 16171, Duluth, MN.

We received responses from Calumet, but did not receive any reply from Liquid Transport, Inc.

On December 7, 2012, I received a phone call from from Calumet, saying that they were willing to give

us a facility tour. I scheduled the facility tour for the research team and Dr. Stewart on December 18,

2012 at approximately at 13:30 at Calumet Superior, LLC., Duluth Marine Terminal.

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With the advice of Dr. Stewart, I prepared beforehand a list of questions to ask at the tour. Dr.

Stewart also gave me advice to compose questions. (See Appendix II). Calumet did not fill out the survey

form which was sent with the letter, but in return was willing to give us a facility tour, along with a

discussion.

M/V Paul R. Tregurtha

While on the tour the research team had an opportunity to observe the bunkering operation for

M/V Paul R. Tregurtha at the Calumet facility tour. The following is a description of a Great Lakes bulk

carrier.

M/V Paul R. Tregurtha is a Great Lakes-based bulk carrier and the largest vessel on the Great

Lakes. She is 1,013 feet (309m) lengthwise with a beam of 105 feet (32m); her carrying capacity of

Taconite pellets is up to 68,000 gross tons. She was built in 1981 by American Ships Building Company

yard in Lorain, Ohio, first named M/V William J. Delancey. In 1990, her name was changed to M/V Paul

R. Tregurtha in honor of Interlake Steam Company’s Vice Chairman of the Board (The Interlake Steam

Company).

M/V Paul R. Tregurtha is equipped with main engines made by a German company,

Maschinenbau Kiel GmbH (Mak). According to the Interlake Steam Company, the engine horsepower is

17,120 bhp. This is the third season that the ship has operated with the MaK engines. The vessel was re-

powered in the winter of 2009 to 2010 during winter lay-up. In a conversation with the research team, the

vessel’s Chief Engineer, Mr. Rick Laksonen, said that the ship burns 9,700 U.S. gallons (36,718.49 liters)

of IFO a day on average when they are underway. He also mentioned that in the winter the ship loads fuel

in Duluth every trip in case the vessel would not be able to stop at a fueling dock because of ice. In the

summer they load fuel less frequently.

Due to its length and beam, the M/V Paul R. Tregurtha cannot sail into Lake Ontario. According

to the St. Lawrence Seaway Management Corporation “The Welland Canal Section of the St. Lawrence

Seaway”, vessels more than 225.5m (740 feet) long, or 23.8m (78feet) wide cannot travel through the

Seaway locks (11). The St. Lawrence Seaway Management Corporation mentions in their “The Welland

Canal Section of the St. Lawrence Seaway”, that there are eight locks between Lake Erie and Lake

Ontario (See Figure 1). This means that the M/V Paul R. Tregurtha cannot leave the Great Lakes.

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Figure 1: Welland Canal Profile

Source: The St. Lawrence Seaway Management Corporation, Corporation “The Welland Canal Section of

the St. Lawrence Seaway” (2003 7)

Observing Bunkering Operations at Calumet Fuel Terminal Duluth, MN

The detailed facility schedule on December 18, 2012 :

• 13:00 - Left University of Wisconsin-Superior.

• 13:20 - Arrived at the Calumet Superior, LLC., Duluth Marine Terminal

Observe arrival docking of the vessel: M/V Paul R. Tregurtha

Pass security and sign in

The research team was given a safety briefing and put on safety equipment

Observed the following:

Red Bravo flag (B-flag) was up.

B-flag is a red colored flag from one of the International Marine Signal Flags,

and it means a ship is engaged in loading or discharging hazardous material.

The B-flag image from International Code of Signals

The ship and the shore communication were established

The hoses were connected to the ship’s manifold. Two hoses were hoisted using a shore

crane with saddles to support the hoses and prevent them from twisting or kinking. The

hoses went from the terminal’s piping system to the ship’s fuel manifold. A six inch

diameter hose was used for diesel fuel and an eight inch hose for Intermediate Fuel Oil

(IFO).

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5 Great Lakes LNG- Vessel Fuel Terminal – Hiroko Tada CMA 2013

• 13:30 – Bunkering started

When the bunkering started we had to move to the general area for safety issues.

Mr. Graham ensured all valves were correct, and after approval from the vessel, he then

started supplying diesel oil slowly. When he made certain that all was in good order with

the diesel he then set up and started providing IFO-280 (#6 oil).

During the bunkering operation, Mr. Graham was constantly checking for any leak, and

that proper back pressure was maintained.

Calumet supplied blended diesel fuel, Number 2 Diesel Oil (#2 oil) for 6,000 U.S. gallons

(22,712.47 liters) and 55,000 U.S. gallons (20,8197.65 liters) #6 oil to M/V Paul R.

Tregurtha.

During the operation, Mr. Graham took the samples of diesel oil and #6 oil. Sampling is

conducted to confirm the fuel specifications are correct for the vessel. If the fuel is the

wrong kind, it might cause problems such as fire while the sailing due to overheating the

engine. Excessive expansion due to heating might also cause spillage. The sample

container “sealed carefully labeled with the name of the ship, the name of the supplier,

date of delivery, exact time of day, and the number of the container’s seal” (Buckeley

190). Mr. Graham took #6 oil samples for the ship and for Calumet, and one #2 oil

sample for the ship. He mentioned that Calumet would not keep a #2 fuel sample,

because they only have one #2 tank at their facility.

U. S. Coast Guard (USCG) arrived for an inspection of the fueling operations.

The USCG talked both ship’s chief engineer, Mr. Rick Laksonen and Calumet manager,

Mr. Graham, then went on the ship for an inspection.

There were two people from the ship monitoring the fuel transfer operation; one ship

crew member staying by the manifold, and the other ship crew member, which was the

chief engineer, on the dock.

• 14:00 – Finished bunkering #2 oil to the ship

The #2 Diesel oil valve was shut down, then air was blown into the hoses to force the

remaining diesel in the hose into the ship’s tank.

It took approximately 30 minutes to load 6,000 U.S. gallons (22712.47 liters) of #2 oil to

the ship, which is 200 U.S. gallons (757.08 liters) per minute (6,000 gallons/30 minutes =

200 gallons/minute).

• 14:25 – Finished bunkering #6 oil to the ship

The #6 was loaded at a 157 Fahrenheit (72 Centigrade) because of the #6 oil’s high

viscosity so it has to be heated in order to flow through the hose. The outside temperature

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6 Great Lakes LNG- Vessel Fuel Terminal – Hiroko Tada CMA 2013

was about 23.9 F˚. Calumet supplied 55,000 U.S. gallons (20,8197.65 liters) of the #6 oil

to the ship, and Mr. Graham mentioned that the loading rate was 1,200 U.S. gallons

(4,542.49 liters) per minute.

Shut down the #6 fuel. The remaining #6 oil in the pipeline was reversed to the Calumet

tank. The pipe has a breathing valve in order to bring air into the pipes to avoid collapse.

Mr. Graham gave the #6 fuel sample with ship paper work and pumping ticket which

issued from pumping metering station to the ship's chief engineer.

• Disconnected hoses from ships

Shut down every system in the facility and check for leaks.

• Authorized the ship to leave

• 15:00 – Facility tour and discussion

• Sulfur Testing

• 15:27 – Returned to UWS

M/V Paul R. Tregurtha Chief Engineer: Mr. Rick Laksonen

Mr. Laksonen said they used to go to the fuel terminal that had the lowest fuel price before the

ECA. However, since ECA was activated on August 1, 2012, the ship’s main concern has shifted to sulfur

content. Their biggest concern now is who has the lowest sulfur content fuel. To meet the ECA, Mr.

Laksonen said he thought that the ship may use natural gas instead of installing scrubbers. If the ship

stayed with IFO and installed scrubbers it will take long time to pay back on the scrubbers. Also, using

the scrubbers brings up the issue of disposal of hazardous waste material. The scrubber is an exhaust gas

purification system (Blikom 100). The advantage of installing scrubbers is that the initial capital costs are

less than changing ship’s engines’ to LNG and installing LNG tanks. Also, with scrubbers, ships are able

to use Heavy Fuel Oil (HFO) in the future ( Bilkom 59). Mr. Laksonen pointed out the disadvantage of

scrubber technology: the waste material generated from the scrubbers is an environmental threat.

Moreover, the TEN-T report, “North European LNG Infrastructure Project” mentions that the capital

investments in the scrubber and infrastructure for scrubber waste disposing in ports are also disadvantages

of implementing the scrubber technology (Bilkom 59).

Tour of Calumet Fuel Terminal Calumet Bunkering Hoses

Calumet has three different dimensions of hoses; six inches, four inches, and three inches. They

used two different dimension hoses for the M/V Paul R. Tregurtha bunkering operation. One is the six

inch hose for Number 6 Oil (#6), also called the Intermediate Fuel Oil (IFO 280), and the other one is for

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7 Great Lakes LNG- Vessel Fuel Terminal – Hiroko Tada CMA 2013

diesel hose. Each hose has a bonding cable inside of them, which prevent sparks caused by static

electricity. The bonding cable equalizes the electric charges before they develop sufficient amount of

electric charge to produce static sparks (Aviation Fuel Handling Handbook 16). It is very important to

control electrostatic charges in order to reduce the risk of fire or explosion caused by the sparks.

The Pumps

Calumet has four different pumps. Three of them are located inside their facility: the pumps for

pumping the heavy fuel, diesel fuel, and pumps for blending the diesel fuel into heavy fuel. The fourth

pump is for pumping fuel for the ships’ bow thruster. This pump is located at the far end of the facility.

Photo 1 shows the building of the fourth pump. The bow thruster is a device which is built into the bow

of a ship to assist in maneuvering when docking or turning in a small harbor (Alderton 29). The purpose

of the bow thruster is to provide lateral movement of the ship which is difficult and/or cannot be achieved

only by turning the ships’ screw and helm. Vessels that do not have a bow thruster require tugboat

assistance when they dock or when turning. Using a tugboat is costly and requires time to arrange. Having

a bow thruster reduces these times and costs. (Need citation). Depending on the bow thruster, they require

diesel or electricity for their engine. The fourth pump at Calumet is used to pump the fuel to the bow

thruster engine without the need to shift the ship.

Photo 1: Building for the Bow Thruster Pump

Source: Dr. Stewart, Richard. “P1210077”. 2012. JPEG image

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Calumet’s Current Fuel Supply Calumet obtains its fuel from the Calumet Refinery located in Superior, Wisconsin. The refinery

obtains its crude oil from Canadian wells that arrives at the refinery by pipelines. Calumet terminal does

not have a pipeline to transport their fuel at their terminal. The refined products are shipped to the

Calumet fuel terminal by truck. The Jeff Foster trucking company delivers most of the fuel to the fueling

terminal from the refinery. A diesel delivery truck and a heavy fuel delivery truck can unload their fuel at

the same time since Calumet expanded their truck terminal two years ago.

One of the advantages to Calumet is having a refinery closer to fueling terminal. Calumet refinery

is located in Superior, 2407 Stinson Avenue. According to the Google Map, the approximate distance

from the Calumet fueling terminal to the Superior refinery is 7.9 miles (See Map 1). One of the more

expensive transportation modes is motor carrier. Having a refinery close to the fueling terminal enables

Calumet to keep transportation cost low.

Map 1: Refinery location to fuel terminal

Source: Google Map

Low Sulfur Content Fuel

Sulfur dioxide (SO2) is a toxic gas, a member of sulfur oxide (SO), and is produced from burning

fuels containing sulfur, such as coal or oil (EPA 3-3). Also, when the fuel burns at a high temperature, it

generates nitrogen dioxide (NOx). These SO2 and NOx are the major precursors of acid rain (EPA 3-3).

Sulfur dioxide is also a major substance of fine particulate soot and causes negative health effects.

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The sulfur content of fuel differs by the crude oil and the refining process. Calumet tests for

viscosity, gravity, and sulfur contamination at the terminal. Calumet terminal is not responsible for

refining the lower sulfur content fuel, but the refinery has to meet the requirements. The refinery certifies

the fuel before leaves the plant.

Density

Density is a measurement used to calculate the quantity of fuel delivered. Three important

reasons for the density or specific gravity of fuel is listed below (Ewart 4):

1. Operation of centrifuges that clean the fuel of particulate matter (Ewart 4).

2. Density enables calculations to be made about the volume of space required to store a given

weight of oil or conversely to discover the weight oil resulting from the sounding of a tank

(Ewart 4).

3. Density is measured in expressing quantities of oil purchased or use in terms that can be readily

understood (Ewart 4).

Also, density is an indication of the ignition quality of the fuel within a certain product class,

particularly for the low-viscosity IFOs (Vermeire 10).

Viscosity

Viscosity is a measurement of the liquid’s resistance to flow. Viscosity is affected by

temperature, and sales contracts usually specify that viscosity shall be calculated at 50˚ Celsius (Buckley

191).

In the conversation with the research team, Mr. Graham mentioned the heaviest fuel that the ships have

recently been taking is Bunker C (#6 oil), the ratio is 380-ish by steamboat, and it is stored in the tank

401.

Flash Point

Flash point is the temperature at which the vapors of a fuel ignite when exposed to a flame (Ewart

7). The minimum flash point temperature of shipboard residual fuels has been set 60˚C (140˚F) by the

United States Coast Guard.

The Storage Tanks and Capacities

Calumet has four tanks at their terminal. Photo 2 is the photo from Google Earth showing each

storage tank location, empty spaces, and truck loading dock. Photo 3 is the storage tank, taken by Dr.

Stewart. The tank number 3-1 is for the #2 oil with a capacity of 3,000 barrels ( 42 gallons per barrel, 405

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tons) tank. They usually store 116,000 U.S. gallons (439,107.77 liters). The tank number 3-2 is for IFO

320 and has the same capacity as 3-1 tank. Next to tank 3-2, there is a small tank to store the Petroleum

contaminated water (PCW). The other two tanks are number 401 and 402. Both of these store 4,000

barrels (540 tons) of Number 6 oil, which is also called Bunker C oil.

With the exception for the diesel PWC tanks, each tank has three lines. The suction line used to

pump to the ship, the fill line used for filling the fuel into the tanks from the trucks, and the return line.

The return line makes the fuel loop around the building which allows for uniform temperature inside of

tanks in order to be able to load the fuel aboard the vessel.

Photo2: Calumet Superior, LLC., Duluth Marine Terminal Picture

Source: Google Earth

• 3-1: Number 2 Oil • 3-2: IFO 320 • PCW: Petroleum Contaminated

Water • 401: Blended IFO 320 • 402: Blended IFO 320

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Photo 3: Calumet Superior, LLC., Duluth Marine Terminal Storage Tanks

Source: Dr. Stewart, Richard. “P1210078”. 2012. JPEG image Possibility for LNG Storage Tanks

In the tank storage area, there are four empty spaces to build additional tanks. Calumet could

build new storage tanks for LNG at their terminal using these empty areas. In the conversation with the

research team, Mr. Graham indicated that the empty space between 3-1 and 401 are too close to build a

new tank; however, the back three empty spaces are available.

It is easier for ships to fuel at Calumet than go to a newly built facility because Calumet has received

approval by the U.S. Coast Guard (USCG) for bunkering operation. The main issue LNG storage tanks

are the USCG has not issued the regulations regarding LNG with building. After the regulation is

revealed, Calumet may not build new tanks using their empty space that was mentioned above. However,

Mr. Graham indicated in discussion with the research team that Calumet leases their land through Duluth

Seaway Port Authority. If Calumet needs more space to build new storage tanks for LNG and comply

with the regulation, they could lease additional space from the Port Authority. Photo 4 shows additional

possible empty spaces to build new facilities.

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Photo 4: Additional Potential Storage Tank Location

Source: Google Earth

The Competitor In the discussion with the research team, Mr. Graham mentioned that Calumet Superior, the LLC

Marine terminal does not have competitors at the upper lake. At Two Harbors, Minnesota, there is a fuel

terminal, but they are fueling Canadian flag ships. This terminal purchases fuel from the Calumet refinery

because of the Calumet is the only refinery in the Wisconsin.

Discussion of Fuel Consumption

Mr. Graham calculated the data below for the research team:

The first year the Calumet opened was in November of the 1998-1999 season. As of December

18, 2012, when we visited Calumet terminal, Mr. Graham did not have the data for the 2011-2012 season

as the season was not yet complete. During the winter time when the ships stop operation, Calumet

Terminal does maintenance on their facility.

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The total sold fuel gallon in thirteen seasons is about 245 million U.S. gallons, and the average

per year is 18.8 million U.S. gallons per year. Calumet sold approximately 40% #2 oil over the last three

seasons combined. They also sold 60% #6 oil over the last three seasons combined not including the

2011-2012 season.

Three seasons’ detailed information is below:

2006 – 2007 Season

• Number 2 Oil: 10,270,881 U.S. gallons, which is 39.5% of the total fuel that Calumet sold

• Number 6 Oil: 15, 605, 330 U.S. gallons, which is 60.5% of the total fuel that Calumet sold

• Total: 25,876,211 U.S. gallons

2007 – 2008 Season

• Number 2 Oil: 7.686,173 U.S. gallons, which is 32% of the total fuel that Calumet sold

• Number 6 Oil: 16,304,659 U.S. gallons, which is 68% of the total fuel that Calumet sold

• Total: 23,990,832 U.S. gallons

2010 – 2011 Season

• Number 2 Oil: 8,817,750 U.S. gallons, which is 38.5% of the total fuel that Calumet sold

• Number 6 Oil: 14,086,623 U.S. gallons, which is 61.5% of the total fuel that Calumet sold

• Total: 22,904,373 U.S. gallons

Conversion to LNG

According to the U.S. Department of Energy, one gallon of #2 oil (Diesel) has 113% of the

energy of one gallon of gasoline. Whereas, one gallon of LNG has 64% of the energy of one gallon of

gasoline. LNG has less energy than diesel oil so that the ships burn LNG faster than diesel. This means

when ships use LNG as a fuel, they have to fuel greater amounts of LNG than they fuel with currently.

To calculate how much LNG will be needed to replace the current fuel with LNG, we first need

to convert each IFO’s into British Thermal Units (BTU). BTU is the amount of the heat energy requires to

raise the temperature of one pound (lbs) of water by one degree Fahrenheit (F˚). By using BTU we are

able to compare different fuels into a common unit of measurement based on the energy content of each

fuel.

As stated in the previous section, over a thirteen year period Calumet sells 7,520,000 U.S. gallons

per average year for #2 oil (40% of average selling of 18.8 million per year), and 11,280,000 U.S gallons

of #6 oil per average year ( 60% of average selling of 188 million per year).

According to the U.S. Department of Energy, #2 oil energy content (in LHV, lower heating value,

which is close to the actual energy yield) is 128, 450 BTU per U.S. gallon, and LNG has 74,720 BTU per

gallon. For #6 oil, Bartok mentions in his “Approximate Heating Value of Common Fuels”, it has

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153,200 BTU per U.S. gallon. Therefore, the 7,520,000 U. S. gallons of #2 oil are equivalent to

approximately 955 Billion BTU. Also, 11,280,000 U.S. gallons of #6 oil have approximately 1,728

Trillion BTU. Therefore, if vessels use LNG as a fuel, Calumet will need to supply approximately 30.7

million gallons of LNG per average year (1 gallon of LNG = 87,600 BTU in LHV).

Conclusion

In this report, we discussed the potential of shifting suitable Great Lakes carriers to using Natural

Gas, specifically Liquified Natural Gas (LNG) as a fuel to meet the requirement of the North American

Emission Control Area.

Visiting Calumet Superior, LLC., Duluth Marine Terminal (Calumet), the team observed that

there are potential spaces to build LNG storage tanks in their existing fuel storage tank area. Moreover,

Calumet could negotiate with their landowner, Duluth Seaway Port Authority, to expand their site if

needed.

The advantages of building LNG storage tanks for fuel bunkering are (1) Calumet has already

been approved by the USCG for bunkering operation, (2) Calumet is the largest U.S.fuel supplier in the

head of the Lakes area, and (3) Calumet has empty areas to build new LNG storage tanks.

In addition, the development of LNG terminals in the Duluth / Superior region shows that there

are synergies between the build-up of an LNG terminal infrastructure and industrial use. Map 2 shows

Twin Port LNG terminal marketing region. There are multiple potential markets for LNG. Within 250

miles, this region has a market of 4.3 million people. The transportation hub includes four class one

railroads, largest dry bulk port in U.S., trucking, and mining, transit and agriculture as well as shipping.

Map 2: Twin Ports LNG Terminal Marketing Region

250-Mile Radius of Duluth and Chicago

4.3 Million People

Mining Marine Transportation

Transit

Rail

Trucking Pipeline

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Work Cited

“Alternative Fuel Data Center – Fuel Properties Comparison” U.S. Department of Energy. 15 Nov 2012. PDF. 27 Jan 2013.

Aviation Fuel Handling Handbook. Office of Aircraft Services. Idaho. U.S. Department Of The Interior. 3

Jan 1994. Print. Bartok, John W. Jr. “Approximate Heating Value of Common Fuel”. University of Connecticut. Dec

2004. PDF. 26 Jan 2013. Blikom, Lars Petter. "Status and Way Forward for LNG as a Maritime Fuel." Australian Journal of

Maritime and Ocean Affairs 4.3 (2012): 99-102. ABI/INFORM Complete. Web. 5 Jan. 2013. Buckley J. James. The Business of Shipping. 8th ed. Need city of publication Schiffer Publisher.2008.

Print Co-financed by the European Union. “North European LNG Infrastructure Project: A feasibility study for

an LNG filling station infrastructure and test of recommendations”. Copenhagen: The Danish Maritime Authority. March 2012. 8 Jan 2013. PDF.

DNV Managing Risk. DNV. 2012. 3 Jan 2013.

http://www.dnv.com/industry/maritime/servicessolutions/fueltesting/fuelqualitytesting/iso8217fuelstandard.asp

Ewart W. D. Bunkers: A Guide for the Ship Operator. United Kingdom: Fairplay, 1982. Print. Harbor House Publishers. Greenwood’s Guide to Great Lakes Shipping 2009. Michigan: Harbor House,

2009. Print. “North American emission control area comes into effect on 1 August 2012”.International Maritime

Organization. Briefing 28. 31 July 2012. Web. 9 Nov 2012. Stewart Richard D. “Natural Gas: A Transportation Fuel for the Future?” File last modified: 26 Oct 2012.

Microsoft PowerPoint file. The Interlake Steamship Company: On the Great Lakes since 1913. The Interlake Steamship Company.

Accessed December 29, 2012. < http://www.interlake-steamship.com/> The St. Lawrence Seaway Management Corporation.“The Welland Canal Section Of The St. Lawrence

Seaway”. The St. Lawrence Seaway Management Corporation. March 2003:7,11. PDF File. United States Environmental Protection Agency. “Proposal to Designate an Emission Control Area for

Nitrogen Oxides, Sulfur Oxides and Particulate Matter: Technical Support Document”. EPA. April 2009. PDF.

Vermeire, B. Monique. “Everything You Need to Know About Marine Fuels”. Chevron Global Marine

Product. July 2007. PDF.

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Appendix I Survey Instrument

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Appendix II Questions for Calumet

• Who is your competitor in this region? • Who is your competitor in the upper lake and lower lake? • Who are your suppliers for each different type of fuel? • How do you bring the different types of fuels to your terminal?

Low sulfur content fuel

• Can you supply low sulfur content (EPA- ECA ) fuel to ships? o Sulfur limit in Fuel (% m/m)

Effective from 1 January 2012: 1.0 % 1 January 2015: 0.1 %

• Who are your suppliers for lower sulfur content fuel? • How much low sulfur content fuel will you be able to supply? • Do you have competitors to supply lower content sulfur fuel in the upper lake/ lower lake?

Because of the Emission Control Area regulation, the shipowners are considering shifting their fuel to LNG,

• Have you ever thought about supplying LNG from your terminal?

If yes,

• Where will you get the LNG for your terminal? o Peak Shaving

• How would LNG be brought to your terminal? • Do you have room for LNG Storage tanks

o Conversion numbers: • What modifications would be needed to your terminal to fuel ships with LNG

Who are your customers for LNG?